Today’s tip will cover “What is a SEP IRA?”
A SEP IRA, is a Simplified Employee Pension Individual Retirement Account used by business owners to provide a simplified method to contribute to their employees’ retirement and their own retirement savings. A SEP does not have the start-up and operating costs of a conventional retirement plan and allows for a contribution of up to 25 percent of each employee’s pay. This type of plan allows for flexible annual contributions and the employer must contribute for all eligible employees. A SEP IRA account is a traditional IRA and follows the same investment, distribution and rollover rules as a traditional IRA.
There are several factors to consider if a SEP IRA is the best way for you to save for retirement. Feel free to contact me to see if a SEP IRA is right for you. And remember to consult with your tax advisor for your specific tax related questions.
And remember to Savvy Up!!
Catherine Magaña is a CFP® or CERTIFIED FINANCIAL PLANNER ™ in Carlsbad California.
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